WILMINGTON, Del. (AFX) - There are at least 12 bidders for Tower Records, an investment banker for the bankrupt music retailer said in court papers filed Tuesday.
The unit of MTS Inc., based in West Sacramento, Calif., filed for Chapter 11 protection in Delaware Aug. 20.
However, the affidavit signed Friday and filed Tuesday by Christopher DiMauro of Houlihan Lokey Howard & Zukin said three prospective purchasers have had face-to-face meetings with Tower Records' management and conducted due diligence.
DiMauro says he has been in contact with 'at least twelve prospective purchasers' that have expressed an interest in participating in the auction, which is set for Oct. 5.
One of the nation's largest retailers of music, with 89 company-operated stores (it owns only one, leases the rest), Tower Records is due to go before a bankruptcy judge Wednesday to seek approval of bid rules for the sale.
In its second Chapter 11 case in recent years, Tower Records is selling all of its assets in an effort to pay its bills.
At least one vendor, the record label Six Degrees Records Inc., also signaled it would be keeping an eye on the auction process.
Six Degrees says it has nearly $1.9 million worth of inventory on consignment with Tower Records in a California warehouse.
The vendor says it can't tell from the proposed bid rules whether assets going on the auction block include the CDs it says belong to Six Degrees, not Tower Records.
Such objections are common in big retail bankruptcy auctions, as vendors and landlords jockey for negotiating power with the unknown buyers that are about to become their new business partners.
The U.S. Trustee's Office has asked that a consumer-privacy ombudsman be appointed to safeguard personally identifiable information Tower Records has collected on its customers.
CIT Group, which is financing the fast bankruptcy sale, is owed about $79.5 million and has top priority, court records say.
Major vendors say they're owed nearly $83 million on a secured basis. Tower Records put the secured-trade-debt figure at about $74 million.
Unsecured debt includes about $36.5 million in bonds and an estimated $15 million owed to suppliers.
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